Simple: it requires people buying New Zealand houses to either build new ones, or actually live here, either permanently or temporarily.

And that's a completely defensible idea. Homes are not some sort of abstract financial instrument to provide tax-free capital gains to absentee foreign speculators - they're for people to live in. At the moment, their utility as the former seems to be undermining the latter. And that's something a competent government which cared about its people (rather than foreign, tax-cheating speculators) would do something about.

As for the nitty-gritty, the core provisions largely mirror existing provisions relating to sensitive land. There's no obvious fish-hooks or errors. And there's a regulations clause allowing the Minister to exempt applicants from particular countries from this part of the Act (which would enable compliance with various FTAs). Its also worth noting that people who are ordinarily resident in New Zealand are not "overseas persons" in terms of the Act, and simply will not be affected (and rightly so; permanent residents are already kiwis. They can vote, FFS). The law only applies to absentee property speculators, people who have no intention of living in the houses they buy.

Overall, this looks like a good, sensible, perfectly defensible measure. So naturally, National will vote it down to protect its foreign friends.